VZCZCXYZ0000
RR RUEHWEB

DE RUEHEG #2039/01 2991222
ZNR UUUUU ZZH
R 261222Z OCT 09
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 3992
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS CAIRO 002039 
 
SIPDIS 
 
STATE FOR NEA/ELA 
 
E.O. 12958:  N/A 
TAGS: ECON EINV EFIN ETRD EAGR ENRG PGOV EG
SUBJECT: EGYPT'S ECONOMY: October 26 PRESS ROUND-UP 
 
¶1. (U) The following are notable economic news stories that appeared 
over the past week in the Egyptian press: 
 
----------------------------- -------------------------------- 
Egypt Rejects World Bank's Call for Electricity Price Increase 
----------------------------- -------------------------------- 
 
¶2. (U) Aktham Abu El Ella, Undersecretary of the Ministry of 
Electricity, announced that the Ministry rejected World Bank 
proposals for price increases in electricity. The World Bank 
submitted a study to the Government of Egypt (GOE) recommending six 
different methods to increase prices on electricity during peak 
hours, bringing Egypt's prices closer to global standards.  The GOE 
heavily subsidizes the cost of electricity, and rejected price 
increases on the grounds that they would be a difficult financial 
burden for many citizens (Al Masry Al Youm, 10/18/2009, Al Shorouk, 
10/19/2009). 
 
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Egypt Protests EU Ban on Egyptian Potatoes 
------------------------------------------ 
 
¶3. (U) Saad Nassar, Senior Advisor to the Minister of Agriculture, 
is protesting the European Union's new ban on importing Egyptian 
potatoes. Egypt and the EU have been in a dispute for the past two 
months over whether the number of detections of brown rot, a plant 
disease, in potato shipments from Egypt actually exceeds the limit 
agreed to by Egypt and EU plant quarantine authorities, which caused 
the EU to impose the ban. The EU maintains that its move is legal 
under the terms of the Egyptian-European Partnership framework, 
while Egypt has suggested that the EU's ban amounts to unfair 
protectionism (Al Masry Al Youm, Al Ahram, 10/21/2009). 
 
----------------------------- ----------------------------- 
Agreement Will Link the Egyptian and London Stock Exchanges 
----------------------------- ----------------------------- 
 
¶4. (U) The Al-Mal newspaper reported that the Egyptian Stock 
Exchange signed an agreement with London Stock Exchange linking the 
two markets. The agreement will allow foreign investors to have full 
access to Egyptian companies, and Egyptian investors will have 
direct access to British and American companies. The new system will 
be formally implemented in the second quarter of 2010 (Al Mal, 
10/22/2009). 
 
----------------------------------------- 
EGX Suspends Trading to Fight Speculation 
----------------------------------------- 
 
¶5. (U) The chairman of the Egyptian Stock Exchange (EGX) temporarily 
suspended trading on 26 companies on October 11, citing severe 
speculation.  Directors of four different securities brokerages 
praised the step as a mechanism to fight irrational movements of the 
stock prices, while some of the companies whose stocks were 
suspended argued the exchange should have issued a warning before 
taking action against them.  To date, very few of the 26 companies 
have been able to return to being traded on the exchange, with the 
majority still suspended (Al Alam Al Youm, Al Mal, 10/14/2009). 
 
--------------------------------------- 
Big Losses for Public Weaving Companies 
--------------------------------------- 
 
¶6. (U) New estimates indicate that the 35 Egyptian public weaving 
companies will suffer annual losses of LE2 billion (US$364 million), 
roughly the same amount the companies lost last year. The new 
estimate led to calls for rapid privatization of the companies, 
based on the public sector's inability to modernize and labor 
inefficiency, which make it unable to compete with the private 
sector. (Al Alam Al Youm, 10/18/2009). 
 
 
--------------------------------------------- ------ 
Internal Disagreement in the NDP over Privatization 
--------------------------------------------- ------ 
 
¶7. (U) Egypt's Minister of Investment Mahmoud Mohieddin and the 
Secretary General of the ruling National Democratic Party (NDP), 
Safwat El-Sherif, took contradictory stances over the country's 
privatization program.  Mohieddin asserts that the government will 
move forward with selling private shares in state-owned enterprises, 
while El-Sherif stated that the program was not a priority (Al-Mal, 
10/25/09). 
 
------------------------------------ 
Egypt to Allocate New Stimulus Funds 
------------------------------------ 
 
¶8. (U) The Egyptian Minister of Economic Development Osman Mohamed 
Osman announced that the government is planning to allocate an 
additional LE10 billion (US$1.8 billion) in economic stimulus money, 
on top of the original LE15 billion (US$2.7 billion) stimulus 
package it had budgeted in response to the global economic crisis. 
90% of the new LE10 billion outlay will be devoted to water, 
sanitation, and infrastructure projects, Osman stated (al-Mal, 
al-Masry al-Youm, al-Akhbar, 10/25/09). 
 
SCOBEY